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Riyadh: Saudi Arabia said it is cutting import tariffs on food and building materials from yesterday, after inflation in the world's largest oil exporter almost doubled in the six months to February.
The Saudi cabinet decided on Monday to cut duties on food products such as frozen poultry, dairy goods and vegetable oils to five per cent from about 20 per cent, the Saudi Press Agency said.
The move is the latest in a string of measures by the government of the largest Arab economy to offset the impact of inflation on its 25 million people after price rises touched a 27-year peak of 8.7 per cent in February.
Saudi Arabia has said it is committed to pegging its riyal currency to the dollar, even though the US currency's persistent decline through record lows against the euro is driving up import costs.
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"There are rising inflationary pressures and they are trying to do something about it," said John Sfakianakis, Chief Econ-omist at SABB Bank, HSBC's Saudi affiliate.
"They are signalling, 'We are not revaluing, we are going to go the other way in dealing with inflation'."
Since December, Saudi Arabia has ordered three-year cost of living allowances for public sector employees, boosted subsidies on rice, baby milk and other products and introduced welfare payments.
Levies on building materials such as paints, gypsum, electrical cables and plastic pipes will also be cut to five per cent, while duties on wheat products will be eliminated entirely, the agency said.
On list: 180 items to cost less
The customs agreement will apply to "180 items ranging from basic foods, necessary building materials and other consumer goods," the cabinet said.
"The cabinet has agreed that the state will shoulder the difference between the duties agreed under the unified customs levy of the Gulf Co-operation Council," it added.
The measure could cost the government around four billion Saudi riyals ($1.1 billion) per year.
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